Hot Sauce!https://www.caycon.com/blog
The Secret Sauce for Entrepreneurs - Startup Tips from the experts at Cayenne ConsultingThu, 01 Dec 2016 20:16:58 +0000en-UShourly1https://wordpress.org/?v=4.6.1How to Win Government Contractshttps://www.caycon.com/blog/2016/11/how-to-win-government-contracts/
https://www.caycon.com/blog/2016/11/how-to-win-government-contracts/#respondTue, 29 Nov 2016 19:21:13 +0000https://www.caycon.com/blog/?p=8457The 8 (a) program and other SBA certifications can give small businesses a clear advantage when bidding on government contracts. These programs give its members added weight when bidding for sole source opportunities. While you are provided better visibility with a certification, you aren’t guaranteed an outcome with contract awards.

Ultimately, it’s still up to you to prove to government agencies that your company is the right choice for the project.

Government agencies have a huge responsibility to ensure that taxpayer dollars are spent wisely. They are burdened with an enormous pressure to complete projects on time and on budget. When a government agency considers a new firm, they are undertaking a significant risk that they wouldn’t be taking by hiring someone they have prior experience with.

Your challenge as a small business owner and certification award recipient is to prove that you can effectively manage projects and get your foot in the door to become one of those trusted vendors.

Start with Subcontracting

If you are new to government contracting, it’s a good idea to subcontract alongside a firm that has contracted with the agency before. Even if you are not able to team up with a previous contractor that has worked with the agency, the act of collaboration itself reduces risk. Positive relationships with other firms will also benefit you when you pursue private contracts as well.

Refine and Update Your Business Plan and Capabilities Statement

Business plans are a great reference point when crafting a bid proposal. A well written business plan will highlight your strengths and provide evidence of success and capability. If it’s been a couple years since you’ve last looked at your business plan, it’s time to review and update it. Now put together your capabilities statement so government agencies can easily see your company’s strengths and references.

Provide Adequate Evidence to Your Claims

The most important point to include in your business plan and future contract proposals is evidence of a good track record, which can be shown in the form of testimonials, case studies, and successfully completed contracts. You will also need to make your team’s qualifications clear. In the meantime, continue building relationships with people who have influence and connections with agency contract officers.

Prove You Understand What’s Important to Government Agencies

You need to demonstrate that you “get” the processes and nature of government contracting. Public agency needs are far different from those in the private sector. Requests for proposals (RFPs) from these agencies come with very specific requirements that ultimately protect against accusations of neglect or unfairness. Public agencies are generally subject to a relentless amount of scrutiny from auditors and the general public. Follow the evaluation criteria to the last letter to even be considered.

Get the Right Certifications

Government agencies like certifications because they are easy to evaluate. Either you have them or you don’t, and there is a trusted, thorough process in achieving them. They demonstrate that your company is ready, willing, and able to perform on contracts. Certain contracts are automatically set aside for small businesses, particularly businesses owned by minorities, women, service-disabled veterans, and those operating in economically disadvantaged areas. SBA Certifications that you can apply for include:

The 8(a) program: This certification is awarded to small businesses that are controlled by minorities.

The Women Owned Small Business (WOSB) program: This certification is awarded to small businesses that are controlled mostly by women.

The Service Disabled Veteran Owned Small Business Concern (SDVOSBC) program: This certification is awarded to small businesses owned by veterans who were wounded during their service.

The HUBZone program: This certification is awarded to small businesses that operate in economically disadvantaged areas.

Allow us to help you with your SBA certification process and create a compelling business plan that you can use as a guide for your proposals. Learn more about our services and sole source programs for small businesses on our SBA Certifications page.

]]>https://www.caycon.com/blog/2016/11/how-to-win-government-contracts/feed/0How to Keep Your Sanity as an Entrepreneurhttps://www.caycon.com/blog/2016/11/how-to-keep-your-sanity-as-an-entrepreneur/
https://www.caycon.com/blog/2016/11/how-to-keep-your-sanity-as-an-entrepreneur/#respondFri, 25 Nov 2016 18:19:48 +0000https://www.caycon.com/blog/?p=8454The title says it all. Enlightened Entrepreneurship: How to Start and Scale Your Business Without Losing Your Sanity by Christopher Myers looks at how entrepreneurs can grow and still manage their work and balance their lives properly.

Maintaining the balance between life and work is one of the most common challenges entrepreneurs face. The expectations and pressures associated with startup businesses can be tremendous. So it’s not surprising that many entrepreneurs struggle to keep all aspects of their lives in balance as they strive to make their business a success. Myers, the cofounder and CEO of BodeTree, a financial management tool for small businesses, shares deeply personal essays about his journey as an entrepreneur. His insights are designed to convince small-business owners that they can grow their business without “selling (one’s) soul.”

The book contains three sections: Starting Your Business, Scaling Your Business, and Staying Sane. The book includes insights both from the BodeTree experience as well as insights gleaned from essays on diverse subjects such as Ikea’s approach to the user experience to what Myer calls the “adorable puppy principal.”

Starting Your Business, Scaling Your Business

In the first section, Myers provides advice on growing both a business and a brand, with chapters focused on pre-business considerations, company growth, product development, marketing and recognition, and gaining traction. The second section takes a more detailed look at the functional areas of a business, including day-to-day functions of a CEO, pitfalls, and opportunities for growing your business, start-up funding challenges, managing people and when to exit the business.

Sanity in a Business Context

It is in the last section that Myers, a frequent contributor to Forbes, differentiates himself. Chapters here look at managing yourself, finding balance, leadership lessons, and managing anxiety and depression.

“One thing I’ve come to realize is that everything, good or bad, starts in the mind,” Myers writes. “What you think is, in fact, what you become. If you focus on balance, self-awareness, and humility, those traits become part of how you run your business.”

In a recent Forbes article, Myers discussed the susceptibility entrepreneurs have to the negative effects of persistent stress. He explained that while vacations and mindfulness exercises provided temporary relief from the stress of starting his company, moments of peace could be fleeting.

Myers argues that you should work at changing the patterns that follow a stressor. According to him, a stressful stimulus prompts a response, often in the form of negative thoughts or feelings. In turn, those thoughts and feelings can spur a physical response, from sweaty palms to upset stomachs to a quickened pulse.

For Myers, poorly received sales presentations were a constant source of stress. He took such responses as a personal offense. It seemed that it wasn’t the product that wasn’t liked, it was him.

He eventually began adjusting his mindset. Negative feedback and rejection were information he could use to improve the presentations. Myers began deconstructing those interactions, looking for the reasons why a pitch was rejected.

He also began changing some of his behaviors in reaction to that stress. Myers stopped dwelling in hypotheticals and addressed the issues in the presentations head on.

While it’s true that many entrepreneurs may need to rethink their business models, Myers suggests that the best approach is to rethink your thinking. The book provides insights that can help you succeed in business as well as in your personal life. Put simply, Myers’ book truly can lead to enlightened entrepreneurship.

How Your Small Business Can Directly Compete with Enterprise Size Firms and Win

In recent years we’ve seen corporations grow larger and more powerful with an endless stream of mergers and acquisitions. This has created a serious challenge for competing small businesses due to the seemingly unlimited resources enterprise size firms have at their disposal.

There are several tried and true ways for small businesses to compete with large corporations, including emphasizing a quick and personal customer service response, the customization of products, or a partnership with larger firms as a subcontractor. The Small Business Administration, however, through its certification program, offers local and national assistance in an effective and tangible way, significantly increasing small business competitive strength. Through certifications programs like HUBZone, the SBA helps small businesses grow in historically underutilized business zones. A HUBZone certified firm can make a truly powerful and lasting difference in the business and local community.

Small Business Certifications Empower Businesses and Communities

A real problem for some communities is that very little money trickles down from large corporations into local neighborhoods. The research firm Civic Economics found that only 13.6% of corporate revenue is re-circulated back into the neighborhood where the revenue was generated, while 52% of small business revenue is directed back into the local economy. At the same time, successful smaller firms also contribute to local job creation. For example, national firms don’t necessarily hire from the communities in which they are situated, but a smaller, local firm will likely hire people from the same area in which the firm is located.

To create a more stable national economy, the Federal government understands that it must make a significant effort to empower small businesses. The HUBZone program, one of the best solutions, allows historically underutilized communities to strengthen from within by rewarding qualified certification recipients with Federal contracting advantages, thereby creating jobs and revenue for local economies.

Benefits of HUBZone Certification

Businesses who qualify for the program benefit from:

Sole source Federal contracts, which essentially put them in front of the line ahead of large corporations when bidding.

Better subcontracting opportunities. Even if smaller firms don’t have the capability to take on an entire contract, large federal contractors are still expected to incorporate HUBZone subcontractors in their bids.

Special bonds and tax privileges. Eligible HUBZone businesses receive higher SBA-insured surety bonds on construction and service contracts. Those in Federal Empowerment Zones and Enterprise Communities (EZ/EC) can also get tax credits, tax-free facility bonds, and investment tax deductions.

Qualification Requirements

To qualify, the small business must meet the following requirements:

Meet the size requirements as determined by the Small Business Administration (SBA).

Be owned and controlled at least 51% by U.S. citizens, a community development corporation, an agricultural cooperative, or a Native American tribe.

The principal office must be located within a HUBZone with at least 51% of employees performing work within that zone. HUBZone locations include qualified census tracts, non-metropolitan counties, Indian reservations, and former military bases that were closed for privatization. See the SBA’s HUBZone map for details.

Hire 35% of employees from a HUBZone, though not necessarily the one where the company is located.

Cayenne Consulting helps HUBZone clients apply for certification and stay updated on their application status. Qualifications and supporting documentation must be maintained in order to protect from decertification and contract loss. Cayenne also creates persuasive business plans, which can help you make the most of your local and Federal opportunities. Please visit our SBA Certifications page to learn more.

]]>https://www.caycon.com/blog/2016/11/how-your-small-business-can-boost-a-disadvantaged-community/feed/0Understand the Power of the Question to Drive Innovationhttps://www.caycon.com/blog/2016/11/need-help-with-a-business-plan-understand-the-power-of-the-question/
https://www.caycon.com/blog/2016/11/need-help-with-a-business-plan-understand-the-power-of-the-question/#commentsTue, 15 Nov 2016 00:00:00 +0000https://www.caycon.com/blog/?p=8443In his new book, A More Beautiful Question: The Power of Inquiry to Spark Breakthrough Ideas, author Warren Berger urges us to understand that all questions are not created equally. He urges readers to discover compelling solutions by taking a different approach to what others may see as problems or nuisances.

Asking the right questions effectively is a powerful way to drive innovation. Berger encourages focusing on three categories of questions: Why? What If? and How?

The answers to these questions create powerful clarity and lead to transformational change. Berger writes:

In some sense, innovation means trying to find and formulate new questions that can, over time, be answered. Those questions, once identified, often become the basis for starting a new venture. Indeed, the rise of a number of today’s top tech firms – Foursquare, Airbnb, Pandora Internet Radio – can be traced to a Why doesn’t somebody or What if we were to question, in some cases inspired by the founder’s personal experience.

Where to Begin: Asking “Why?”

Often, effective inquiry begins with asking Why, where essential questioning begins to clarify an issue. By confronting, framing, and formulating the right Why questions, the challenge can be articulated clearly and lead to an understanding of the necessary context.

The best questions take a situation that is less than ideal and try to understand what is lacking in the scenario. Asking the innovative questions and forming a new perspective allows entrepreneurs to discover new opportunities.

Take, for example, Airbnb. The book details the process that led the Airbnb founders to start their company. Living in San Francisco and short on rent, they realized that many businesspeople in town for conferences were finding it hard to secure hotel rooms. The Why question became: Why should you be stuck without a bed if I’ve got an extra air mattress you can sleep on?

Moving From “Why?” to “What If?”

The leap of faith for entrepreneurs comes in not just finding a problem, but pinpointing what to ask next. This next phase of action questions helps separate entrepreneurs from philosophers. This phase answers the question What If, examining the possibilities that begin to shape a possible solution.

At Airbnb, the leap of faith came when the founders realized there was an opportunity to do more than rent out their few air mattresses. The founders started asking questions like: What if we provide more than just a mattress to sleep on?, What if we create our own website? and What if we could create this business in many major cities?

This phase may require pursuing a number of possible solutions by asking deeper questions about viability, marketability, affordability, and demand. In some ways, this is the most fun phase of effective questioning as it relates to entrepreneurship.

The What If phase needs to move rapidly, but not so fast that potential solutions don’t have time to develop, coalesce, and evolve.

Leading to “How?”

Transformation comes when that one, well-vetted, thoughtful possibility rises to the top. For the entrepreneur, this begins the How phase. In this phase, leaders determine how to move an idea from concept to reality, begin developing a business model, and test product-market fit.

This phase requires persistence and determination on the part of an entrepreneur. Like in each phase, innovative questions are essential, including How do I test my idea to see what works and what doesn’t and If it doesn’t work, how do I figure out what’s wrong and fix it?.

At Airbnb, the founders decided that a political convention in Denver was the place to test their idea. But with no money for advertising, they had to answer the question How are people going to hear about us?

Pitching a “solution story” to local media looking for an angle on the crowded city led to a story on CNN. Airbnb was on its way.

Powerful questions will drive innovation, empower entrepreneurs, and create needed solutions. Read the book and try it out for yourself!

]]>https://www.caycon.com/blog/2016/11/need-help-with-a-business-plan-understand-the-power-of-the-question/feed/1Listen Like a Leaderhttps://www.caycon.com/blog/2016/10/listen-like-a-leader/
https://www.caycon.com/blog/2016/10/listen-like-a-leader/#respondTue, 25 Oct 2016 17:49:29 +0000https://www.caycon.com/blog/?p=8424[Read More]]]>With organizations and individuals so fervently focused on the bottom line, it’s easy to ignore “softer” goals, such as listening well. “All that touchy-feeling stuff is a waste of my time,” or “I’m too busy to worry about that now,” you might say or think. Think again!

A focus on listening can lead to more effective teamwork, higher productivity, fewer conflicts and errors, enhanced innovation and problem-solving, improved recruiting and retention, superior customer service, and more. As authors on leadership development have noted through the years, listening is not just the right thing to do, it’s essential to business success.

“Make the human element as important as the financial or the technical element,” wrote Stephen Covey in his seminal book, The Seven Habits of Highly Effective People. “You save tremendous amounts of time, energy and money when you tap into the human resources of a business at every level. When you listen, you learn.”

As long ago as 1966, Peter Drucker, author of the classic The Effective Executive and numerous other books, emphasized the importance of listening to both self and others as an essential step in bringing to light everyone’s role as contributors to the organization’s overall success.

Likewise, studies in Emotional Intelligence (EI) over the past couple of decades have found that leaders actually “infect” the workplace (for better or for worse) with their attitudes and energy. To understand and influence these flows of emotions and motivational states, leaders need to be able to practice empathic listening skills.

In their book Primal Leadership, authors Daniel Goleman, Richard E. Boyatzis, and Annie McKee describe how varying leadership styles rely on listening skills for their effectiveness:

Visionary leaders listen to values held by individuals within the group, enabling them to explain their own goals for the organization in a way that wins support.

Coaching leaders listen one-on-one to employees, establish rapport and trust, and help employees help themselves in matters of performance and information gathering.

Affiliative leaders listen for employees’ emotional needs and strive to honor and accommodate those needs in the workplace.

Democratic leaders elicit ideas and participation by listening to everyone’s opinions and information.

In Seven Habits, Covey cites numerous examples of successful business deals and resolved workplace issues in pointing out the importance—and power—of empathic listening versus mechanical, or perfunctory, listening. He also acknowledges that it takes time and practice to become adept at listening empathically. Here are some tips for sharpening your listening skills:

Develop your curiosity. This helps with Covey’s suggestion: seek first to understand. Genuine curiosity is felt by others and helps to open up their speech and your listening.

Work with a coach. Coaches can help you discover ways to listen better not only to those you work with, but also to yourself.

Listening better will reward you with an entirely new level of communication and problem-solving skills, for empathic listening requires the ability to see multiple points of view in any given situation.

]]>https://www.caycon.com/blog/2016/10/listen-like-a-leader/feed/0Embracing the Start-Up J Curvehttps://www.caycon.com/blog/2016/10/how-entrepreneurs-can-survive-the-j-curve-with-a-strategic-business-plan/
https://www.caycon.com/blog/2016/10/how-entrepreneurs-can-survive-the-j-curve-with-a-strategic-business-plan/#respondMon, 10 Oct 2016 15:00:00 +0000https://www.caycon.com/blog/?p=8372[Read More]]]>In his latest book, entrepreneur Howard Love guides fellow business owners through the predictable phases faced by most entrepreneurs. Love’s book provides a step-by-step guide for small-business owners on how to recognize and maximize on each of the phases.

The Start-Up J Curve: The Six Steps to Entrepreneurial Success places the six phases on the classic entrepreneurial J-curve, so named for the inevitable early-stage challenges most start-ups take. Love dispels the “straight line to success” myth that pervades the industry, helping entrepreneurs comprehend why each phase occurs, and what they should focus on during each phase.

Embracing the J-Curve

Love provides excellent insights from his years as the founder or co-founder of seven companies and as an angel investor in a number of others.

Let’s take a closer look at the six stages, the first three or four of which need to be navigated before most companies come close to turning a profit:

Create. The Create stage is where the “big idea” is formed. Love encourages entrepreneurs to be “problem-sensitive” during this phase. This means looking closely at the world and pinpointing specific, solvable problems. Identified problems lead to solutions that can be commoditized and spun into profitable start-ups.

Release. Too often, Love argues, entrepreneurs focus on perfection and tinkering, wanting to get things just right, add one more feature, or go through one more round of updates. Love encourages entrepreneurs not to get trapped in this phase. “Too much tinkering in the context of a startup can be an unconscious delaying,” Love writes. Tinker too much, and a would-be entrepreneur may never be able to pull the trigger. Love encourages start-up founders to be OK with getting products, even seemingly imperfect ones, to the market.

Morph. This phase is all about customer traction, according to Love. It also is one of the most challenging. It requires entrepreneurs to make changes based on how customers are using, or not using, a product. Entrepreneurs have to focus on what is most compelling to customers. Morphing the product to meet consumer needs is essential, although at times, it may be painful as entrepreneurs let go of parts of their original vision. However, Love stresses that morphing is not about failure; it’s about refining a product to meet customer interest.

Model. It’s at this stage that Love believes an entrepreneur should focus on how to rethink the business plan. While a preliminary, strategic business plan is prudent at earlier phases, during the Model phase it is wise to reexamine assumptions and business models, particularly if the Morph phase radically changed the product or market focus.

Scale. Scaling is a very relative phase, depending on the product or service. For some companies, the Scale phase may mean a ten-fold increase in operations. For others it may mean becoming 100 times bigger. However, it’s important that you scale not only when you have the money to do so, but when your business plan is robust and reflects the expansion.

Harvest. Love argues that the Harvest phase is, in many ways, the most fun. This is when an entrepreneur can reap the rewards of all the hard work. Entrepreneurs can be deceived by the hyper growth that precedes a Harvest phase, but such growth will not last forever. It’s important to know when the time is right to cash out by taking the company public or selling it.

Addressing failure

Each chapter of the book includes examples and stories, many from Love’s own entrepreneurial experiences. Throughout the book, he encourages start-up founders to take each mistake or setback as a learning opportunity.

“Instead of feeling lost and confused when you suffer a setback – something that happens to start-ups quite frequently in their initial stages – you’ll be able to put these problems in context,” Love writes. “By knowing exactly where you are on the path, and what to do at that point in time, your odds of success will increase, and you will get to success faster.”

]]>https://www.caycon.com/blog/2016/10/how-entrepreneurs-can-survive-the-j-curve-with-a-strategic-business-plan/feed/04 Steps to Take Before Hiring a Business Plan Consultanthttps://www.caycon.com/blog/2016/10/4-steps-to-take-before-hiring-a-business-plan-consultant/
https://www.caycon.com/blog/2016/10/4-steps-to-take-before-hiring-a-business-plan-consultant/#respondFri, 07 Oct 2016 17:59:43 +0000https://www.caycon.com/blog/?p=8410[Read More]]]>Who among us hasn’t dreamed of becoming their own boss, of being a successful entrepreneur? Maybe you have worked as a top salesperson for many years and have faith in your ability to generate and convert leads. Perhaps you work in a small business and feel certain you could run your own, even better. Maybe love people, food, music, and drink, so the restaurant or nightclub business has always called to you. Or you have invented a better widget and want to bring your idea to market under your own corporation. Whatever the reason, you find yourself, now, at a place where you intend to start a business of your own.

So you have your idea and nothing will stop you, but you need financial investment to bring your business to life. What next? At some point, most entrepreneurs feel the need to prepare a pitch deck, business plan, and financial forecast. Some do so in order to solicit investment from friends and family, banks, angel investors, or venture capitalists. Others plan to invest their own capital, but still want to prepare a written plan as a means of thinking through the venture and to map out a path to success. Either way, a business plan is an essential tool.

For most entrepreneurs, preparing these materials represents a major, time-consuming challenge. Fortunately, there are consultants who specialize in business planning. But if you hire a consultant too early in the process, you could be wasting both time and money. What steps should you take before hiring a consultant in order to get the most out of the relationship?

Here are four essential steps you should take:

1. Research: You feel in your gut that your business idea is a great one, but is there a ready market? What is your total addressable pool of customers? Where are they located? How will you reach them? Who are your direct and indirect competitors? What sets your business apart as different and special in the eyes of your customers? All crucial questions that need to be answered before you put pen to paper.

2. Check your business model: Do you have a real concept and business model, or is it an idea that needs more work? Do you have a concept drawing? A prototype? Where will it be manufactured, and what are the minimum runs and the lead times? What is the cost of each unit with shipping and packaging? Is the product viable in the marketplace after adding your markup? Some business planning consultants can help you with this process, but most cannot. Either way, these questions and much more must be answered before your plan can be finalized.

3. Leasing Property: Nearly all startups will require some type of lease to get off the ground. For manufacturers, restaurants, and retailers, this is a crucial success factor. In a real business catch-22, you will need the funding to secure the lease, but you can’t secure the lease without the funding. What do you do? Take some time before you contact a business plan consultant to look at potential properties, improvement costs, zoning, permits, and licenses involved. It could take a couple of months or more to find a property that suits you, or at least find a sample property you can use for your plan financial model.

4. Marketing: Most business planning companies cannot help with this part, and will simply put your ideas on paper. If you are working with a company like that, be prepared to have talked with a few marketing firms ahead of time to develop a coherent marketing plan for your business and understand the associated costs. Or choose a business planning company that has marketing skills and can challenge your assumptions and add value to your marketing plan.

To transform your entrepreneurial dream into reality is not an easy task. The more prepared you are for business planning, the better your plan will be; the better your plan is, the better your chances to raise the capital needed to successfully launch your venture.

My first job after college was as a field sales engineer at Schlumberger – an oil-field services firm. I learned what it meant to be the face of a company at a customer site. For customers like Shell, BP, and Exxon, the field engineers represented Schlumberger. We delivered a technical service, but it was the professional way in which it was delivered that made Schlumberger a leader in oil field services world-wide. Our core competitive advantage was the relentless focus on being the easiest firm to do business with.

When I joined Hewlett-Packard in France, I started in a marketing position in Europe where I represented HP’s mobile product line – calculators and laptops – to retail channels and corporate clients in Europe. I learned how to translate the customer expectations into implementable action items in terms of product features and services. I created a special bundle for the offshore industry, thus launching the first PC in the world to be deployed in the demanding North Sea environment. I was quite successful in this field, and HP offered to move me to the US to lead the product management of a new generation of mobile devices.

I was proud to be part of the first team at HP to incorporate Voice of the Customer at the front end of the product development process. Traditionally, HP suffered from “next-bench syndrome,” as most of its products were designed by engineers, for engineers. As it broadened its customer focus to include the wider consumer market, its technical strength suddenly became a weakness. Voice of the Customer process was meant to change the product development paradigm at HP. Even though the company had significant cultural barriers to overcome, our team forged a new customer-focused path that led to ground breaking new products such as the world’s first palmtop PC with Lotus 1-2-3 built in, as well as world’s first ultra-thin laptop PC.

I carried this customer driven philosophy to my next positions as Director of Product Management, and later as Vice Product of Business Development at Nortel. The customers were regional Bell companies, but the focus on customers remained the key to business success. I was fortunate to be part of a telecom startup company funded by Kleiner Perkins and Cisco, that went public in 2001.

After a short stint at a venture capital firm and as a small business owner, I joined Eller College of Management at the University of Arizona as Director of Executive Education. I taught innovation strategy to MBA students, and was voted Professor of the Year by the students three times in seven years. I brought new customer focused tools such as Business Model Canvas to the classroom.

Since 2012, I have been working as a management consultant and corporate educator, working with large firms such as Raytheon and Roche Diagnostics, as well as myriad startups in Europe, Asia and North America. I also work with the National Basketball Association to teach professional basketball players how to become savvy entrepreneurs and investors.

I strongly believe that the only way a business can be successful in the long run is by being relentlessly customer focused. By attracting the right people, designing products that anticipate future customer needs, and creating internal systems and processes with the end user as the design center, a business can enjoy sustainable competitive advantage.

]]>https://www.caycon.com/blog/2016/09/my-customer-experience-journey/feed/0Need Start Up Funding? Here’s a Great Tip…https://www.caycon.com/blog/2016/08/need-start-up-funding-heres-a-great-tip/
https://www.caycon.com/blog/2016/08/need-start-up-funding-heres-a-great-tip/#respondWed, 31 Aug 2016 00:00:00 +0000https://www.caycon.com/blog/?p=8347[Read More]]]>If you need start-up funding for your business, you need to present a business plan that shows clearly the business you propose to go into and your place in it. Prospective investors will expect you to cover all the bases and give them a very clear picture of what your chances for success are.

Tell Investors Your Strengths, Weaknesses, Opportunities, and Threats
All businesses have strengths, weaknesses, opportunities and threats (SWOT); itemizing them is called a SWOT analysis. Outlining these in detail is essential for a business plan.

SWOTs are a chance to give investors the big picture for your business idea. You can impress them with the thoroughness of your understanding as well.

Say that your business idea is to create a restaurant chain with all the convenience of mighty McDonald’s (drive-throughs, quick and convenient service, inexpensive meals). But your light-bulb idea is that this chain will be devoted to healthy food. Fresh kale. Steamed broccoli. Fresh fruit in cups. You plan to capitalize on the increasing American interest in health and the increasing awareness that fast food is deep fry and more fry, on the whole.

Your strength is precisely that interest in health, combined with the draw of convenience. Your weakness might be the difficulty of placing fresh vegetables and fruit in easy-to-eat containers. That’s when you explain that your design team has a plan for cups and utensils, as easy as the cardboard container of fries that fast food sells.

Your opportunity? Capitalize on the fears that McDonald’s and the like are one big heart attack waiting to happen.

Your threat? McDonald’s and the others get wind of how popular your kale and broccoli are. They adapt your recipes to their kitchens. They use their powerful real estate advantage to roll out their version everywhere the Golden Arches sit.

That’s when you explain that your trucks will go anywhere to compete with the Golden Arches. You’ll deliver to waiting cars.

Facts, Facts, and More Facts
The other essential ingredients of a business plan are tightly researched facts about every facet of the business and your competitors.

Your investors will want to know:
1. Is your business sector growing? Staying the same? Declining? Investors have a tendency to like growth industries. But if you have a great idea in a flat business, that might be good too. A declining sector might meet with skepticism for start-up funding.
2. What is the total sales volume, industry-wide? Which competitors have which share? Why? What’s your plan to take market share?
3. What are the important financial metrics in the industry? Net profit? Revenue? What are the figures of your competitors?
4. Does seasonality affect your business?
5. Do demographics affect your business? Going forward, the number of older people in the U.S. will rise exponentially. Millennials save more than any other age group. Are there any impacts from demographics, good or bad, that you need to take note of?
6. Does politics affect the business sector? Will pending legislation or an election cycle change the possibilities or climate?
7. Do you have any significant barriers to entry? Specify what they are. What will you do about them?

Clarity Is All
Your business plan needs to be very clear and transparent to potential investors. Prepare an executive summary that gives them an easy-to-read overview. Make sure that the detail is logical, clear, and well-phrased, with supporting graphics that are easy to decipher.

It is generally understood that business plans are important, but few people actually know what should be included to create an effective business plan. Rather than relying on trial and error that could cost your startup support and funding, here are the essential elements of a winning business plan.

1. Your business plan must be professional and grammatically correct.

A business plan is the first impression most investors and backers will have of your business, and you want to put your best foot forward by making sure your plan looks neat, professional, and uses grammar correctly.

2. Your business plan must be well organized and user-friendly.

Make it as easy as possible for your plan to be understood by organizing it well so that it tells a compelling story. One way to test for user-friendliness is to have someone you trust read it and give you feedback before you present it to potential investors or partners.

3. Your business plan must show how the business solves a real problem in a unique way.

Not everything is a real problem that demands a marketable solution. If you don’t have a real problem and a unique solution, you don’t have a viable business. Keep tweaking until you get this one right. Marketers call it the unique value proposition and it will be critical to persuading investors and supporters.

4. Your business plan includes a market analysis and marketing strategy.

Goals show your vision for what the business will become, and milestones show your time frame for getting there. Investors and partners will want to see both. Write persuasively so that they will catch your enthusiasm for your plan.

6. Your business plan is realistic about competitors.

Saying that your business has “no competition” is unrealistic and won’t fly with savvy investors or partners. All businesses have competition, and your task is to recognize yours, even if you expect to blow them out of the water. A business that truly has no competition is actually not a good thing – it indicates that there is probably not a market for your products and/or services.

7. Prepare a compelling executive summary.

If the first page of the plan doesn’t hook the reader, chances are the rest of the plan will never be read. You must make an immediate, compelling case without sensationalizing or using superlatives.

8. Your business plan has realistic financial projections.

Experienced investors will see right through rosy projections, so be as realistic about costs and revenues as you can possibly be.

Creating a list of items to include in your business plan is fairly easy, but actually writing a compelling business plan takes a knack for putting words together that not all entrepreneurs feel they have. If you need help putting together a winning business plan, turn to Cayenne Consulting for the expertise that can take your business to the next level. Contact us for more information on business services we offer.

]]>https://www.caycon.com/blog/2016/08/8-essential-elements-of-a-winning-business-plan/feed/0Pitch Perfect: The Fundamentals of Great Pitch Deckshttps://www.caycon.com/blog/2016/07/pitch-perfect-the-fundamentals-of-great-pitch-decks/
https://www.caycon.com/blog/2016/07/pitch-perfect-the-fundamentals-of-great-pitch-decks/#respondFri, 29 Jul 2016 19:54:10 +0000https://www.caycon.com/blog/?p=8278[Read More]]]>The pitch deck (or investor presentation) is often the first tool you’ll use to connect with potential investors. Its contents should help investors determine whether your business is the right opportunity for them. An effective pitch deck shares your business plan clearly and concisely, and it engages your audience on an emotional level as well.

An effective pitch deck focuses on the problem or “pain point” your business addresses, how it does so, and who is on your management team. When you present your pitch, you have a terrific opportunity to learn some of the strengths and weaknesses of your business plan by watching how your audience reacts.

Who Sees Your Pitch Deck?

Audiences for pitch decks vary. You may present it to angel investors, venture capitalists, startup conferences, or other events that focus on new businesses.

The length of your pitch will vary by event, audience, and venue. You may be given half an hour to present, or you may be given five minutes. In some cases, you won’t even present your pitch deck live, because some investors would rather you submit it electronically. Though there’s no hard and fast rule about how many slides your deck should include, if you’re not specifically instructed, try to keep it under 15-20.

A good approach is to begin with a generic deck, and then customizing it for the pitching opportunity that arise. When you have a robust generic deck that you can customize, you can easily develop a repertoire of special-purpose presentations as needed.

What Should Your Pitch Deck Accomplish?

Your pitch deck (and its various versions) should be presented with an eye to quality over quantity of meetings. Contacting more investors gets you more meetings up to a point, but more meetings don’t always result in more investment. Quality should always take precedence over quantity. Prepare for each pitch by envisioning a specific desired outcome.

Ultimately, your pitch deck should say, “Here’s what we’re doing, here’s how we’re going to do it, and this is the specific thing we’re asking of you.” It should explain exactly how your idea will benefit from funding and should suggest that you will be moving forward with or without the audience’s investment. This introduces an element of friction, subtly asking, “Are you in or out?” and creating a sense of urgency.

Key team members, advisers, and influencers who have necessary expertise

The general makeup of the market opportunity

What competitors are doing and why you have a sustainable competitive advantage

An overview of your go-to-market strategy

Your stage of development in terms of product, customer acquisition, and partners

Risks, challenges, and how you expect to manage them

Financial projections for 3-5 years, along with key assumptions

How much money you want to raise, what it’s for, and the milestones it will reach

Making Your Pitch Effective

Pay attention to length guidelines beforehand. Plan to spend about one minute per slide. Each slide should focus on one single idea. When you keep each slide to one idea, your audience follows along more easily. Work on getting the content of your pitch deck right before worrying about aesthetics. Your slides shouldn’t be dull, of course, but neither should they be so elaborate that the content is overshadowed by design.

Finally, the best way to prepare to give your presentation is to practice it. Start out practicing in front of a mirror, then ask friends and colleagues to watch and critique your pitch. You should also present it in front of a video camera so you can review it and see how others see you, adjusting as necessary to come across most effectively.

A “pitch perfect” pitch deck lets the investors know you had them in mind when you created it, and that you genuinely care about their reaction to it. Don’t ignore time or length constraints, and make it clear why an investor should take your business seriously. If you are interested in getting help creating an ideal pitch deck for your business, please contact Cayenne Consulting.

]]>https://www.caycon.com/blog/2016/07/pitch-perfect-the-fundamentals-of-great-pitch-decks/feed/0Building A Winning Marketing Plan For Your Startuphttps://www.caycon.com/blog/2016/06/building-a-winning-marketing-plan-for-your-startup/
https://www.caycon.com/blog/2016/06/building-a-winning-marketing-plan-for-your-startup/#commentsThu, 02 Jun 2016 15:01:32 +0000https://www.caycon.com/blog/?p=8273[Read More]]]>Guiding a startup company to success is an uphill struggle no matter how great your ideas are. Great products and services deserve great marketing, and they can really struggle to find their places without it. Formulating a strong marketing plan is essential to launching your startup in the marketplace. Here are some tips for getting it right:

Start Studying Your Customers Early

As you may already know, one of the keys to successful marketing is positioning your products or services as ideal solutions to a problem your potential customers are struggling with. This is always a fruitful way to think of your marketing job, but you can get started well before you are ready to actually make sales.

A careful examination of your customer’s needs should accompany the polishing and prototyping that is going on as you move towards selling. Don’t assume that the same problems are out there or that the same people are struggling with them as when you first started development. Investigating your customers’ needs helps you aim your marketing plan at the right people and build effective tools for selling to them.

Build A Customer Persona

This is one of the most important steps in constructing your marketing plan. You need to carefully research your market and create an idealized, archetypal customer. This “customer persona” can and should be highly detailed. You need plenty of demographic and psychographic data in order to target your marketing accurately. Demographics are objective facts about customers, like their age, education, location, and income. Psychographics are the less-tangible characteristics, like interests, behaviors, and the problems described above.

Note that when you are first writing a marketing plan, it can be difficult or even impossible to gather complete information on your customers. After all, you are not even certain of who your customers are until you start selling! This is why your marketing plan needs to be a living document. You will come back to improve your customer persona repeatedly as you make sales and learn more about who is buying.

Take Careful Aim

Once you have gathered all the available information on who you want to sell to, the next job is figuring out how to do it. While the vast range of different marketing tools available to you is well beyond the scope of this brief treatment, you shouldn’t take any of your options off the table when you first craft your marketing plan.

Picking out your marketing strategies requires a little more research. You need to know where, when, and how your potential customers make buying decisions related to products and services in your niche. This is the critical point your marketing needs to hit.

Because it is difficult to collect comprehensive information while you are still in the planning phase, it is a good idea to build a certain amount of flexibility into your plan. Be prepared to shift strategies if new data challenges the initial assumptions you have made about your customers.

Ease Into Selling

As a startup, it is a virtual certainty that you will want to target early adopters. These are the risk-friendly customers who are willing to take a chance on an untried product or service. Early adopters may not share all of the values of the customers who come after them, but they are still your very best source of accurate customer information.

The early adopters who you do business with when you are first starting out have something to offer you that is infinitely more valuable than payment or publicity. They can give you genuine feedback regarding your products and services and tell you whether or not they are satisfied with their experience.

Any good marketing plan needs to include a fine-tuning period after you start selling to early adopters. Their feedback can dramatically alter your marketing strategy and in some cases, even the products you’re selling. Do not consider your plan complete until you have started receiving and responding to real customer feedback.

Every successful startup needs a unique marketing plan that reflects both what the company has to offer and who is positioned to buy it. That makes it difficult to say with accuracy what specific techniques might work for you. The general planning principles described here, though, should serve you well no matter what you intend to sell your customers.

Guest author Patrick Godknecht is a successful entrepreneur and business owner. He operates an online marketing agency, PDGWorldMarketing.com which serves professionals, entrepreneurs, corporations and businesses, no matter how big or small.

]]>https://www.caycon.com/blog/2016/06/building-a-winning-marketing-plan-for-your-startup/feed/1Choosing the Right Strategy for Funding Your Businesshttps://www.caycon.com/blog/2016/04/choosing-the-right-strategy-for-funding-your-business/
https://www.caycon.com/blog/2016/04/choosing-the-right-strategy-for-funding-your-business/#respondThu, 07 Apr 2016 18:55:03 +0000https://www.caycon.com/blog/?p=8196[Read More]]]>Perhaps you are a new entrepreneur about to launch a business or innovation you have been dreaming about for years. Or maybe you have an established business and things are going well, or maybe even too well. In both instances you are going to need capital – the “oxygen” that every business needs to grow and prosper. So now you are writing your first business plan or touching up the old one in anticipation of raising capital.

Capital can only come into a business in one of two ways: capital that is generated internally through positive cash flow from business operations (e.g., selling stuff), or from external funding sources. Obviously, the new entrepreneur is limited to only one option – external funding sources. The established business, on the other hand, is hopefully generating positive cash flow, but may require additional capital in order to fund inventory, growth, or new equipment.

For now, let’s set aside internally generated cash flow and concentrate the search for capital on external sources. Some common sources include:

Investment capital (equity)

Shareholder loans

Bank or finance company debt

Leasing

Government programs

Grants

Other options

So, which funding option is best? Is it best that the capital come from only one source, or does it make more sense for the capital to come from multiple sources? How do you decide? How you decide to capitalize the business is called your capital formation strategy. The capital formation strategy you choose will depend on a number of internal and external factors including:

Your current balance sheet (for established businesses)

How much capital you require

The intended use of funds

Your company’s current credit standing, if any

Your personal credit standing, especially for new businesses or very small businesses

The availability of collateral

Your current cash flow and your ability to service bank or shareholder loans

Covenants on existing debt

Current shareholder agreements

Your current rate of growth

There are undoubtedly a number of other factors to consider depending on your company’s current circumstances, and, quite importantly, where you want your company to go in the next few years.

How do experienced executives determine the best capital formation strategy for their company? First, in considering all of the internal and external factors listed above and, of course, those not listed above, it is time to eliminate those sources of capital that for one reason or another are not available or appropriate at this time. Next, think about the business plan you’ve just written or updated and then build a financial forecast that includes a balance sheet, income statement, and cash flow statement. These forecasts should be presented monthly and annually so that you can see how future changes in the business such as increased sales, additional staffing, or seasonality will affect cash flow. Remember, you don’t want to run out of money.

Here are some typical capital needs and traditional ways of funding those needs:

Financing high value capital equipment such as transportation, plant (factory), or medical equipment can often be accomplished with equipment leasing or term debt from a bank or finance company. Remember, all lenders and lessors love collateral, especially collateral that holds its value.

If you wish to finance a building or building addition, check out the Small Business Administration’s 504 loan program.

And speaking of the SBA, don’t forget that business loans can be funded through the SBA 7(a) program.

Often, entrepreneurs fund research and intellectual property through Federal government grants, and grants from other sources.

Another way to generate capital is to factor your receivables. Factoring is not for every business, but when it works, it can really help.

Bringing It All Together

Here are two typical capital formation strategies that we see all the time:

Example 1: The Cookie Factory

A baker in Chicago with 20 years of commercial baking experience hears that a commercial bakery is for sale. He and his accountant meet with the sellers of the bakery and reach an agreement for the purchase of the bakery. The agreed upon price is $120,000. The deal is subject to the buyer getting financing and the buyer has 120 days to close. He will also need $20,000 in working capital to fund inventory and payroll while waiting to be paid by customers, for a total need of $140,000. Our baker has saved $40,000 which he is prepared to invest in the business. His retired uncle has committed to be his partner and will invest $20,000, so now he has $60,000 of equity capital committed to the business, of which $20,000 will be for working capital and $40,000 will be for the down payment to purchase the business. He then came to our firm and asked us to help write a bank-ready business plan that he would submit to a commercial bank for an $80,000 loan to finance the remaining balance. So, our baker’s capital formation strategy is as follows:

$40,000 of equity capital from savings

$20,000 of equity capital from friends and family

$80,000 of debt capital from a bank loan

His cash flow forecast shows that there is plenty of cash available each month to service the bank debt, and, in time, the baker will be able to buy out the uncle’s investment. The strategy works.

Example 2: The Military Robot

In our second example, an associate professor at Utah State University has developed a robot with the ability to evaluate a battle zone and detect the presence of hazardous materials and gases such as nerve gas and mustard gas. It is also equipped with cameras so that it can detect the presence of enemy troops. The competitive advantage that this robot has is that it is very inexpensive to manufacture and therefore more expendable than competing devices.

Our professor has funded the innovation up to proof of concept from funds provided by the University ($200,000). He is now applying for an SBIR grant from the Department of Defense ($150,000). The DoD, as a condition of its grant, has first right of refusal on purchasing the robot or at least the intellectual property. The professor uses the grant funding to further develop the technology, but he still requires an additional $3 million to reach commercial viability. He speaks with various venture capitalists (VCs), and one agrees that the existing business is worth $1 million, and the VC will supply the remaining $3 million, after which the VC will own 75% of the business. The professor’s capital formation strategy is as follows:

$200,000 of research funding from the university

$150,000 of grant funding from an SBIR Phase I (DoD) grant

$3,000,000 in equity capital provided by the VC firm

The VC firm ends up with 75% ownership in the LLC that owns the robot’s intellectual property and the professor and the university together own the other 25%.

Now that you have your capital formation strategy organized and ready to execute, you may want to confer with your stakeholders and advisers (key staff, shareholders, bankers, attorneys) and listen carefully to their feedback.

Getting your capital formation strategy right is critical to the growth and financial health of your business. Keep in mind that, as circumstances change, your strategy may need to change. Our best advice is that capital formation is a very important aspect of managing for success, just like new customer acquisition, product innovation, and adapting to those inevitable changes.

]]>https://www.caycon.com/blog/2016/04/choosing-the-right-strategy-for-funding-your-business/feed/0Quick Guide to the Perfect Social Media Profilehttps://www.caycon.com/blog/2016/03/quick-guide-to-the-perfect-social-media-profile/
https://www.caycon.com/blog/2016/03/quick-guide-to-the-perfect-social-media-profile/#respondTue, 08 Mar 2016 16:49:37 +0000https://www.caycon.com/blog/?p=8045[Read More]]]>You have less than five seconds to catch the attention of a would-be customer with your social media profile, so it’s imperative to make a big impression, fast. By capturing your brand’s story in pictures and embracing the beauty of brevity, you can build scan-friendly profiles that will make readers want to stick around, learn more about your brand, and click the “follow” button. Here are five tips that will help.

Tell your story in pictures: Most forms of social media allow you to headline your profile with two major images: your avatar and a banner image. A brand avatar (the smaller, usually square or circle image) identifies your brand and should be your logo (or your face if you have celebrity status like Guy Kawasaki). The banner image (sometimes called a “cover image”) is the larger image that spans the width of your screen. This image describes your brand and should communicate what your startup represents. You can use a stock image that you’ve bought, but you can also create a banner for free or use a pre-built one from companies like Canva.com. Whatever you use, be sure it’s a high quality image and is the correct dimensions for the allotted space.

Craft a snappy tagline: Your tagline or “mantra” should be two to four words that explain your startup’s purpose. A good mantra is short and memorable. Move beyond mission statements that are generally long and boring to something brief and catchy, like Starbuck’s tagline “Rewarding everyday moments” or Google’s “Democratizing information.” Your mantra should also be positive and selfless. Customers respond to brands that uplift them and inspire a better society, so use this as an opportunity to share what makes you passionate about your startup. “Get rich” is not a selfless mantra.

Give ‘em plenty of info: Once you have a reader interested and looking for more information about your brand, give it to them! Make sure that you’ve offered full location and contact details as well as a more complete description of what you do and the benefits you provide. Provide as much information as you have space for, and be sure to include a website URL for those who’d like to continue to learn more about your business.

Use vanity URLs: Vanity URLs make your social channels easier to find and share, plus look a lot better than the default string of letters and numbers on marketing or other public-facing materials. You can get a vanity URL from Google+, Facebook, LinkedIn and Twitter. If you can’t find instructions for choosing a vanity URL in the setting section of your social profile, a quick Google search should tell you how to do it.

Check it anonymously: The final test of your page is to view it as a random user would. Open an “incognito window” in your browser (for Chrome, right click the browser icon and select “New Incognito Window”) and type in your fancy new vanity URL. Viewing it this way will tell you exactly what would-be customers will find when they visit your profile. It’s a good idea to share this page with others at your startup to solicit feedback on whether your profile effectively communicates your brand identity in the five-second time frame most users will give you.

Social media is a critical part of your marketing strategy, so take care to get these critical basics right. You’ll reap the benefits of company visibility, audience building, and engagement, which eventually leads to paying customers and investors.

]]>https://www.caycon.com/blog/2016/03/quick-guide-to-the-perfect-social-media-profile/feed/07 Tips for Crafting an Effective Mission Statementhttps://www.caycon.com/blog/2015/12/7-tips-for-crafting-an-effective-mission-statement/
https://www.caycon.com/blog/2015/12/7-tips-for-crafting-an-effective-mission-statement/#respondThu, 17 Dec 2015 18:43:00 +0000https://www.caycon.com/blog/?p=7950[Read More]]]>Many startup business plans include a mission statement but most of these statements are simplified company overviews with vague generalizations about the market or customer base. Instead of explaining a company’s mission, they tend to summarize the company’s products and services.

To be effective, mission statements need to be clarify the intentions of a business while being inspirational and meaningful to customers and employees. Successful mission statements may take time to create but when they are developed correctly, they provide a company with a clear direction and purpose.

The following seven tips can help you create a successful mission statement:

Your mission statement should reflect the long-term vision of your company and state what your company stands for internally (employees and direct stakeholders) and externally (customers, retailers, and the community). Your mission statement should summarize your company’s priorities and its message should be an important part of your company culture.

There are four key elements found in effective statements: Value, inspiration, plausibility, and specificity. In a couple of short sentences, you should be able to convey the value of your company or why your brand exists, inspire and encourage your employees, sound completely reasonable and plausible, and be as specific and relevant as possible.

To develop an effective mission statement, you need to ask some critical questions:

Employees: What can employees expect from your company?

Customers: Who are your customers and how will you make their lives better?

Values: What values are important to your business? What beliefs and morals are important and how are they applied in the workplace? Do you have a particular ethical standard that defines you? What were your founding principles? What are your aspirations?

Community: What are you doing for the community?

Success: How do you define success? How do you plan to achieve success?

Culture: What makes your company culture unique?

Mission statements should always be in the present, rather than a statement about future events. It should state who you are and what is important to you. Your mission statement is who you are today, and should convey that timely message clearly. It’s not about what you hope to become in the future; it’s all about the “now.”

Mission statements should concisely summarize your company’s unique positioning internally and externally. Revise the mission statement until you can make the points as quickly and clearly as possible. Try to limit the entire company’s mission in one or two sentences. Concise mission statements need to be memorable and effective. Concisely state the purpose of your company — the reason for starting it in the first place.

Mission statements should be developed by your entire team and everyone’s views should be taken into account. Not only will you get a better, more comprehensive statement, but your employees will also be more invested in it because they helped create it. Your mission statement needs to accurately reflect your company, and being transparent with your employees will help create a better message.

Mission statements are not created only once. As your company evolves, the mission statement should be revised. It is your company’s overall sense of identity and should be constantly maintained and referred to. No company ever stays exactly the same. Tweaking your statement ensures that it constantly parallels the direction of your company.

A successful mission statement concisely defines the personality and aspirations of a company. A few examples of effective mission statements include:

Coca Cola: “to refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference.”

Southwest Airlines: “We are dedicated to the highest level of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.”

Google: “To organize the world’s information and make it universally accessible and useful.”

Harley Davidson: “We fulfill dreams through the experiences of motorcycling”

These statements are about the company’s passion and priorities instead of the product line offerings or latest technology. These companies reflect their mission consistently through their positioning, advertising, and company culture. These statements provide an impetus for training and motivating employees while defining the way the brand image is communicated throughout the world.

If you create a successful mission statement, you will be able to easily communicate your priorities and point of difference to investors, future employees, retailers, and customers. You will be able to inspire your stakeholders and remain committed to your founding principles.

]]>https://www.caycon.com/blog/2015/12/7-tips-for-crafting-an-effective-mission-statement/feed/0Harvest Great Ideas from Your Company’s Best Assetshttps://www.caycon.com/blog/2015/12/harvest-great-ideas-from-your-companys-best-assets/
https://www.caycon.com/blog/2015/12/harvest-great-ideas-from-your-companys-best-assets/#commentsWed, 09 Dec 2015 22:21:40 +0000https://www.caycon.com/blog/?p=7946[Read More]]]>Many businesses, large and small, have a huge source of great ideas that can help them improve, innovate, and grow, and yet so many of these companies never think of using this amazing corporate asset. What is this highly valuable asset? Its own people. Says David Frood, the author of The Thinking Corporation, “Given that we are all capable of contributing new ideas, the question becomes how do you successfully generate, capture, process and implement ideas?” Becoming an organization capable of answering this question can benefit in a number of ways:

Growth through innovation/creativity – Rather than be constrained by ideas for new products, services and new markets coming from just a few people, a Thinking Corporation can tap into the creativity of all employees. This means that it has a never-ending flow of ideas from which to select those that best fit the strategic plan.

Increased profits – Having the ability to harvest new ideas, the corporation will experience an increase in profits due to savings in operating costs as well as sales from new products, services and ventures.

Higher business values – The link between profits and business value means that the moment a corporation creates a new sustainable level of profit, the business value is adjusted accordingly. This provides a real opportunity for public companies to provide long-term shareholder value and private companies to create wealth for owners and employees.

Lower staff turnover – A Thinking Corporation will provide employees with fair and reasonable remuneration for implemented ideas. This, combined with the culture that must exist for innovation and creativity to flourish, means that new employees will be attracted to the organization and stay longer.

Improved productivity – Staffing costs can be reduced because many employees will be far more productive than they were previously. They will be more productive because of the increased motivation and enthusiasm that comes from planning and implementing their own ideas. Of course, this does not apply to every employee, only those that choose to participate in the opportunity that this new generation of corporate culture and behavior presents to them.

So, how can your company become a Thinking Corporation? The management of any business must genuinely value employees and the contributions that they are capable of making. Mr. Frood offers a step by step approach to becoming a Thinking Corporation:

Step One – Understand the organization’s current capacity to generate and implement ideas. Change the culture so people will be willing to contribute. Employees must feel as though they want to help and then know how the system works if they have a contribution to offer.

Step Two – The next step is one of education. To ensure that all people within the organization have the same understanding of what the new way of working will be, including the reasons for the change and how it will be executed. It is critical that the most senior management is actively supporting the change and is seen by all employees to be doing so. Failure to do this step properly will seriously undermine the probability for the successful implementation of any change program.

Step Three – Finally, the company must institutionalize a methodology to capture, process, and implement new ideas and carry out the training that goes along with this phase. Management must institutionalize new idea creation just as it institutionalizes CRM for managing customers and ERP for managing systems.

For sure, transformation into a Thinking Corporation requires managers and owners of the business to challenge the validity of some long standing business paradigms that may get in the way of making these changes in the business culture. For example:

Management is better at thinking than employees. Really? As ridiculous as it sounds, most corporations are still structured around this paradigm.

All intellectual property is the property of the company. This is a real sticking point any employee’s willingness to part with their ideas. We need to free up our views and treatment of I.P. to recognize and reward the people who contribute original ideas that lead to significant increases in profits.

Only the most senior executives of a company can earn large incomes. In other words, don’t allow employees to benefit from the increase in revenue, profits, and value that accrue from their ideas. Why shouldn’t an employee earn millions of dollars if his/her company increases its revenues by hundreds of millions of dollars? Makes sense to us.

Within their ranks, many companies have people who are bursting with ideas and are often stifling within an environment that is pro-conformity, rather than encouraging brave, entrepreneurial innovations. Yet, we hear managers openly stating that innovation is the answer. There is a notable mismatch between the use of the word “innovation” and the practical application of it. If people are willing and capable of contributing towards the organization’s success, they should also be able to share by way of income, profits, and business value.

David Frood has created a successful consulting business around the ideas expressed in this article. You can learn more about how your business can become a Thinking Corporation downloading his free e-book aptly titled The Thinking Corporation.

]]>https://www.caycon.com/blog/2015/12/harvest-great-ideas-from-your-companys-best-assets/feed/2Stick with Your Concept but Do Your Homeworkhttps://www.caycon.com/blog/2015/11/stick-with-your-concept-but-do-your-homework/
https://www.caycon.com/blog/2015/11/stick-with-your-concept-but-do-your-homework/#respondThu, 19 Nov 2015 19:17:54 +0000https://www.caycon.com/blog/?p=7938[Read More]]]>A local restaurant owner stopped by the office last week. He has operated a neighborhood sushi restaurant for 5 years and decided that it is time to open a second location. We assumed that he meant that it was time to open a second location of his current concept but we were wrong. He wants to open a new concept. He mentioned that he was aware of a troubled restaurant in a good location and thought that he could buy the restaurant and then re-open in that space. He came to us to ask us to write a business plan for the new location so that he could borrow most of the required funding from a commercial bank.

We acknowledged that indeed the time might be right to open a second location given his 5 years of success with his current restaurant. After all, that is what business building is all about. We also acknowledged that the new concept and location might be very successful and of course, it might not. Our concern was that the potential client might be missing the opportunity to build a brand using his current concept as a foundation or launch point. We also reminded the client that no matter his decision, there was a great deal of homework to do.

It seems to us that the benefits of opening a second, third and so on of his current concept far outweighed the benefits of opening a new concept. Why?

There is little to no “execution risk.” The owner knows how to successfully run his concept. He has already done it.

Multiple locations provide the business with an economy of scale in terms of buying, advertising, systems, moving staff from one to another as needed, etc.

It will be a much easier decision for a bank to finance a second location of an existing concept than to fund something new.

Once a small group of stores are opened, there is now a brand that can be franchised.

Perhaps most importantly, the owner will have a much better chance of building equity in a multi-location concept than in a family of different concepts. In other words, the owner will have a better chance of building something that someone else will want to own and pay a premium for 5 or 10 years down the road.

We pointed out that in virtually every city in the U.S. there were successful restaurant entrepreneurs who have created local or regional chains selling pizza, burgers and every other concept that you can imagine. Examples include Oregano’s in metropolitan Phoenix, B Spot in Cleveland, Westshore Pizza in Tampa and Sticky Fingers with a dozen locations in Florida, the Carolinas and Tennessee. Each of these successful concepts was built one store at a time and many are now selling franchises.

After convincing the restauranteur that his best option is to extend his brand by opening a second location of the existing concept we cautioned him about researching and planning the new location carefully. We suggested that he review a number of excellent articles that have been written on the subject including:

An Entrepreneur Magazine article titled Expanding with a Second Location that suggests among many good tips that “you have pre-arranged funding for the second store.”

Our message is as simple as the title: Your best course of action is to go with a second location of your current concept for all of the reasons mentioned above. Equally important, be sure to do your homework, and, as most successful entrepreneurs know, doing your homework almost always begins with a high quality, well-conceived business plan.

]]>https://www.caycon.com/blog/2015/11/stick-with-your-concept-but-do-your-homework/feed/0The M&A Market is Ready… Are You?https://www.caycon.com/blog/2015/10/the-ma-market-is-ready-are-you/
https://www.caycon.com/blog/2015/10/the-ma-market-is-ready-are-you/#respondMon, 19 Oct 2015 16:44:38 +0000https://www.caycon.com/blog/?p=7927[Read More]]]>Selling your business to a 3rd party, for enough cash to retire in style, is the ultimate dream of many business owners. One of the keys to maximizing the sales price is having your business ready to sell when the Merger & Acquisition market is peaking. What makes a business ready for sale? Having these primary value drivers in place:

Stable, motivated management team and a high-performing workforce

Growing cash flow, revenue and profitability

Operating systems that sustain the growth of the business

A Strategic Plan with realistic growth strategies

Effective and documented financial controls

Assuming you have planned and now have these value drivers in place, how do you know the market is right?

Symptoms of a hot M&A Market:

Low, stable interest rates

Availability of financing

Strong or improving economy

Strong or improving corporate earnings

Strong or improving Stock Market value

Supply and Demand – more buyers than sellers

According to Market Pulse Quarterly Survey Report – First Quarter 2015: “Business transaction activity increased across all market sectors in the first quarter of 2015, driven by consumer and market confidence and low interest rates, according to the 1st Quarter 2015 Market Pulse Survey published by the International Business Brokers Association (IBBA), M&A Source and the Pepperdine Private Capital Market Project.”

I asked Todd A. Torquato, CBI, Director of Rivers Edge Alliance Group about the M&A market. Rivers Edge specializes in Lower-Middle Market Mergers & Acquisitions, Investment Banking. Todd said, “It is a seller’s market. There is a glut of qualified buyers in the marketplace and very few good businesses for sale right now. If a business owner is thinking about selling, they should start taking steps now to put themselves in a position to take advantage of the current availability of strong buyers.”

]]>https://www.caycon.com/blog/2015/10/the-ma-market-is-ready-are-you/feed/0Your Business Model is the Foundation of Your Business Planhttps://www.caycon.com/blog/2015/09/your-business-model-is-the-foundation-of-your-business-plan/
https://www.caycon.com/blog/2015/09/your-business-model-is-the-foundation-of-your-business-plan/#commentsThu, 24 Sep 2015 17:44:06 +0000http://www.caycon.com/blog/?p=7887[Read More]]]>The report of the death of the business plan has been an exaggeration, to paraphrase Mark Twain. Yet, we often read opinions in popular business press that the business plan is no longer relevant. All you need is a business model, we are told by business gurus.

While there is no consensus on the definition of a business model, most people use it as shorthand for the revenue model of a business; i.e. how does it make money. A business plan, on the other hand, must not only explain a company’s revenue model, but also its overall business strategy: how it acquires customers; how it creates valuable products and services that someone will actually pay for; its go-to-market plan, and its five year forecast.
In order to be comprehensive, a business model must address the following four key questions:

How does a business create value?

What is its value proposition?

How does it deliver value to a specific set of customers? and

How does it capture value?

Whereas there have been many attempts at putting all this information in a tabular form, the most successful and commonly used representation is the Business Model Canvas popularized in the bestselling book titled “Business Model Generation”, first published in 2010. The Canvas is made available to anyone under the creative commons license. As a result, it has been widely adopted by businesses ranging from Fortune 500 companies to startups. Most MBA programs use this Canvas in courses on strategy and entrepreneurship.

It is best to consider the business model as a foundation of the business plan of the company. It is the company’s DNA, represented on a single sheet of paper. Its brevity is its key strength. It is also a great strategic planning tool to highlight value creating processes and to create “what-if” scenarios when discussing a firm’s strategic options.

When a firm has clearly articulated the nine building blocks or “boxes” in the Canvas, it has answered the fundamental strategic questions facing the firm. The individual boxes refer to the four fundamental value questions in the following way:

Value Creation

The three boxes in top left part of the Canvas relate to value creation.

Key Partnerships

A business needs a network of suppliers and partners to make it successful, because no business can possibly provide every element of a solution by itself. If you are making widgets, you will need parts suppliers. If you are providing services, you will need partners that make the services more useful. Partnerships also reduce the risks inherent in a business. For example, if you outsource your manufacturing, it may be easier to change the production volume and labor requirements more easily than if you owned the manufacturing plant and employed the labor force.

Key Activities

This box describes every activity a firm engages in, to produce its value proposition, i.e. a product or service which someone will actually pay for. The key here is not to get mired in minutia, but to stay at a top level and describe all the activities a firm engages in. For example, a retail store orders inventory, receives it, stocks it, and sells it. A physician’s office schedules patient visits, delivers care on site, and follows up after the visit.

Key Resources

A firm needs key resources to create value. It is useful to think of resources in four broad categories:

Financial resources such as seed capital and line of credit, loans and financial assets

Human resources, comprising the employees of the firm

Value Propositions

This box occupies the top center of the business model canvas. It refers to the actual products or services that a firm offers. A value proposition describes the key benefits of the offering in comparison to its main competitors. It describes what job is your product or service doing. In addition, it describes what customer pains you are alleviating, and what customer gains are you are creating. If you are targeting multiple customer segments, you should describe these benefits for each segment. See this article on how to create a compelling value proposition.

Value Delivery

In order to deliver value to the customer segments it serves, a firm needs to define its customer segments, choose the appropriate channels to reach them, and define what kind of relationship it wants to have with its customers. The three blocks that define value delivery are:

Customer Segments

In order to serve customers effectively, it is best to segment them in one of many ways: segmentation based on demographics such as age or income levels; needs or problems they are trying to solve; or psychological aspects such as fashion consciousness or desire to seek thrills. Trying to be all things to all people is a sure way to go out of business quickly. Once you have described your key customer segments, you also need to define their unique needs or jobs to be done. The greater insights you have in your customer segments and the jobs to be done, the better product or service you will create.

Channels

As the name implies, it refers to the conduit through which you reach your customers. You may have direct face-to-face contact with your customers if you own a pet store, or an indirect contact if you are an online retailer. You may reach your customers through distributors or through a direct sales force. Some businesses try to follow an “all of the above strategy,” but the results are variable. Apple is able to create a strong physical presence in key locations via its iconic stores, just like Nike, while also enjoying a healthy online business. Others like Macy’s have been less successful in using physical and online channels simultaneously. Tesla has taken a direct to consumer approach, completely bypassing the traditional automobile dealer network.

Customer Relationships

A firm must choose what type of relationships it desires with its customers. Will it be short term and transactional, such as that for an airport kiosk, or long term such as that for a credit card or mortgage company. The main objective of any business is to get and keep a customer. The kind of customer relationship it develops is directly linked to its long term profitability. Certain web-based businesses, such as social media networks like Facebook, LinkedIn, or Twitter rely on their customers not just for the advertising revenue, but also for the content they create. These platforms benefit from network effects in monetizing user-generated content.

Value Capture

The two boxes at the bottom literally define the bottom line of a firm. They show how a firm makes money, and what costs it incurs in doing so.

Cost Structures

A firm must spend money on key activities, key resources and key partnerships to conduct its business. Costs can be seen as being either fixed or variable, or a combination. Economies of scale can be used to bring costs down, along with judicious use of outsourcing non-critical processes.

Revenue Streams

This box refers to all the revenue a firm generates. This is where you should get creative about monetizing every activity a customer value. It is no secret that in an automobile dealership, the service department is the real profit generator. Similarly, activities that used to performed for free, such as technical support, can be a revenue generating activity, if a firm charges for support and does an excellent job.

Business Model as the Foundation of a Business Plan

One can see the business model canvas as the blueprint, or the DNA, of a business. It describes value creation, delivery, and capture processes succinctly. It is fast becoming a “must-have” for startups. Many VCs want to see a startup’s Canvas before they will consider investing in it. I have led business model design seminars for organizations ranging from Fortune 500 companies to startups as well as a professional sport organization. However, the business model is a static document, and it lacks some key elements of dynamic business environment such as competition and growth models. For building a business narrative, we need to construct a business plan above the business model, which serves as a foundation.

The Business Plan Essentials

The business plan is a narrative that describes a firm’s historical origin, its strategic view, its competitive environment and competitive advantages, its product and services and their evolution over the next three to five years, among other things. A typical business plan for a startup or a single product company should not be longer than 25-30 pages. However, multi-product companies can have much longer documents that describe their business narrative. A business plan must answer questions regarding the problem it is trying to solve, its differentiation and competitive advantage, its revenue model and people plan. This narrative includes a historical perspective, as well as a look at the future growth path. Some key aspects covered in a business plan but not addressed in the business model canvas are:

Competitive Landscape

No business operates in a vacuum. In fact, if you have no competition, you will either have some very soon, or you are in a no man’s land that no other business finds attractive. It is important to consider both direct and indirect competition. A steakhouse not only competes with other steakhouses; it also competes with fast food restaurants and food delivery services. Airlines compete with other airlines, but also with trains and automobiles. Television competes with social media sites for your share of screen viewing time.

Competitive Advantages and Barriers to Entry

In order to make above average profits, a firm must deliver superior value compared to its rivals. This superior value can come from either differentiated features such as ease of use or greater functionality, or from lower prices that can lead to greater volume. A superior product or market position creates barriers to entry. It is very difficult to introduce a new consumer product such as cereal to the market because the distribution channel is already stuffed with products from leading consumer companies. Thus, no matter how differentiated your product is, it may never see the light of the day. The Internet has opened a completely new channel to challenge traditional distribution channels. It is interesting to see how the Dollar Shave Club razor has taken the razor blade market by storm, battling giants like Gillette, without any physical retail presence.

People Plan

A company is defined by the quality of its people. Superior teams often secure funding for seemingly mediocre ideas, because the venture capitalists believe that smart people will figure a better way out when they hit a roadblock, and pivot to a better solution. A key aspect of business planning is explaining how you will build the right team to execute your vision. Your team’s compensation plan is a critical aspect as well.

Financial Model

No one has seen the future, and no one expects your forecast to be 100% accurate. VCs look for the logic behind your numbers. Simplistic hockey-stick shaped growth curves routinely elicit a smirk from VCs. You have to explain the rationale behind each action. Did the forecast go up because you hired new sales people, or targeted a new segment, or launched a new marketing campaign? It is important to link effects to specific causes. Generally, VCs like to see a three to five year forecast, broken down into quarterly and yearly numbers. They also like to see traditional financial statements such as income statement, balance sheet and cash flow statement, as separate tabs in a spreadsheet. You need to pay special attention to costs. If benchmarks are available in your industry, such as average revenue per employee, or department spending as percent of total revenue, it is important to make sure your numbers are in line with industry norm. If the industry average profitability of a particular segment is 5% of revenue, it will be difficult to convince VCs that your business will generate 50% profits.

The Business Plan’s Three Purposes

A business plan serves three purposes:

First, is is a dynamic document updated regularly that becomes the guiding light for the firm. You measure your success against plan to see how well you achieved what you set out to do. It is the foundation of strategic planning.

Second, it is used to assess a firm’s viability as a sound investment. It convinces the investors that you have thought through all aspects of starting a business, and you have a blueprint to succeed.

Finally, it is a document to attract key talent to your venture. New employees will want to be assured that you have a plan for success, and that you have thought through the key questions regarding how to create a successful enterprise.

To summarize, a business model is the foundation of a successful business plan. One is not a substitute for the other. It may make for a good sound bite, but don’t be tempted to burn that business plan yet, any more than a pilot would burn his flight plan before takeoff.

]]>https://www.caycon.com/blog/2015/09/your-business-model-is-the-foundation-of-your-business-plan/feed/18 Tips for Building a Bankable Businesshttps://www.caycon.com/blog/2015/08/8-tips-for-building-a-bankable-business/
https://www.caycon.com/blog/2015/08/8-tips-for-building-a-bankable-business/#respondWed, 19 Aug 2015 18:15:10 +0000http://www.caycon.com/blog/?p=7883[Read More]]]>When it comes to the question of applying for a bank loan to fund your startup, most experts say, don’t bother. Banks are rarely interested in funding early stage companies these days, especially since the 2008 financial crash.

However, it is not impossible to secure bank funding for your startup. Give yourself better odds with thoughtful planning, diligent preparation, and the eight tips below:

Write a clear, cogent business plan: Prove you have the knowledge, work ethic, and organizational skills you’ll need to make your startup a success by preparing a thoughtful business plan. Focus especially on the financial estimates and offer well-researched documentation for those estimates. Ask a CPA friend to review it before you submit it to your potential lender.

Boost your credit rating: A solid credit score lends legitimacy to your request and shows you’re less of a financial risk to the bank. They’ll want to see that you have a history of paying bills on time, so doing that is a great place to start.

Launch your business in a solid industry: Industries such as food service, transportation, and apparel are among the 10 industries considered extremely risky by potential lenders. If you are determined that your business be funded by a bank, consider an industry that doesn’t depend on expensive and fluctuating resources such as oil prices and has a relatively large profit margin.

Invest yourself: If you expect lenders to put their “skin in the game,” they’re going to expect the same from you. As a general rule, you should personally invest 20% of the total projected loan request. Your willingness to risk a sizeable portion of your own capital shows your commitment to the venture.

Illustrate repayment potential from revenue: Though banks will require collateral – such as your house – to secure the loan, they ultimately are interested in revenue streams, not owning another home. Illustrate in your business plan how you will generate revenue, how much you’ll generate, and how long it will take to get to positive cash flows.

Demonstrate your experience: Offer real, measurable examples of your expertise in your chosen industry or of your track record of running successful businesses. Banks back people, not ideas, so you’ll have to convince them you have the skill set to make their lending decision a success.

Meet on your home turf: Give yourself the home-field advantage by asking potential lending agents to meet at your office or shop, and continue to impress them by asking key members of your team to stop in as well. Showcasing the positive reality of you and your crack team will help them envision the success of your startup. If you are still working from your home office or garage, you are probably still too early in the startup process to be of interest to lenders.

Remove your salary from the request: Banks aren’t interested in lending you money to pay yourself. Leave your own salary out of the equation and instead populate your business plan financials with hard costs such as supplies, and viable collateral such as customer orders and capital equipment.

If you need help getting ready for lenders, agencies like the Small Business Administration and SCORE offer free resources to startups and can connect you with startup-friendly lenders in your area.

If you find it impossible to secure bank funding for your startup, don’t despair. There are many creative and clever ways to obtain the capital yourself and to “bootstrap” your way to a successful and relatively debt-free startup.